South African economy ended 2017 on strong footing

South Africa’s economy grew by 3.1% in the fourth quarter of 2017 ending the year on a strong footing, Statistics South Africa (Stats SA) announced on Tuesday.

At a media briefing in Tshwane, Stats SA’s Deputy Director-General: Economic Statistics Joe de Beer announced that Gross Domestic Product (GDP) in the fourth quarter grew by 3.1% following a revised growth of 2.3% in the fourth quarter. Growth in the third quarter of 2017 was revised upwards from an initial 2%.

“The highest contributor to the growth of 3.1% came from agriculture that grew by 37.5 % followed by strong growth from the trade sector which grew by 4.8%,” said de Beer.

On an annual basis GDP grew by 1.3% in 2017.

“That 1.3% is calculated as the sum of four quarters of 2017,” said de Beer.

The fourth quarter data beat National Treasury projections made at the tabling of the 2018 Budget of GDP growth of 1% in 2017. Previously at the tabling of the Medium Term Budget Policy Statement (MTBPS) in October last year Treasury had projected growth to come in at 0.7% at the end of 2017.

On a quarter on quarter basis, the largest positive contributor to GDP growth in the fourth quarter was the agriculture, forestry and fishing industry which increased by 37.5% - contributing 0.8% to GDP growth.

Meanwhile the trade, catering and accommodation industry increased by 4.8% and contributed 0.6% to GDP growth. The manufacturing industry and finance, real estate and business services increased by 4.3% and 2.5%, respectively contributing 0.5% to GDP growth.

However, mining and quarrying decreased by 4.4%.

In quarter four, nominal GDP was estimated at R1 208 billion which is R29 billion more than in the third quarter.

On an annual basis real GDP grew by 1.3% in 2017 following an increase of 0.6% in 2016 primarily led by increased economic activity by the finance, real estate and business services that contributed 0.4%. The 0.4% contribution was based on growth of 1.9% in agriculture, forestry and fishing, among others.

Expenditure on GDP

Meanwhile, expenditure on real GDP increased by 3.1% in the fourth quarter following an increase of 2.3% in the third quarter.

Household final consumption expenditure increased by 3.6% in the fourth quarter contributing 2.2% in total growth while government final consumption expenditure increased by 1.6%.

Exports increased by 12.3% and imports increased by 26.5%.

Economists had anticipated GDP growth to come in at 1.9%.

“We are forecasting a marginal slowdown in GDP growth to 1.9% quarter-on-quarter in the fourth quarter from 2% in the third,” said Nedbank economists on Monday.

At the tabling of the Budget in the National Assembly last month, former Finance Minister Malusi Gigaba said that while many challenges still remain, there is a sense of optimism about the South African economy going into the future.

“We stand before you with a profound sense of optimism, purpose and resolve,” said Minister Gigaba at the time.

Since the tabling of the MTBPS, the South African economy has grown faster than the projected rate, despite a short recession seen in early 2017.